(10-2-03) The indices did make a small progress, but all in all, today's action was typical after a day of outsized gains. Moreover, given that the overall technical picture is neutral, the market is in need of an outside catalyst to propel it higher, today, there was not any such catalyst. Tomorrow's employment report may provide such catalyst. We don't have much to add for today, other than continue to pay attention to support and resistance levels, if resistance is taken out, then the picture will shift to being more bullish.

 (10-1-03) The indices rallied from support levels, and in just one day, they managed to come pretty close to resistance.  The BSEs and the TOs, suggest that the rally should have continuation, but the TIs and the Quantifiers are still negative,  suggesting that the continuation may be limited! To put it all together,  the overall short-term picture is neutral. It will get definitely more bullish, if the indices can get above resistance. It should be noted that today's sharp rally, took place as the dollar index hit support at 92.25, reflecting investors' and traders' conviction that a floor in the yen/dollar exchange rate has been successfully  engineered by the BOJ at 110 (if you are not familiar with currencies, please note that the dollar index at 92.25, and the yen/dollar rate at 110, are two different things) If that conviction turns out to be false, we believe bullish bets on equities, ought to be re-considered.

(9-30-03) Today the markets had to deal with a sharply lower dollar, sharply higher oil prices, and below expectations, economic reports, no wonder they ran for cover! The markets are quite oversold, and the odds do favor a bounce, however, nasty things happen when the markets are already deeply oversold, yet, they can't recover, so, they sink even further. The key thing going forward, is to pay attention to support and resistance. A break thru support, or, resistance in the next day, should set the tone for additional follow thru, for a test of the  first upside, or, downside target. 

(9-29-03) In the weekly report we said: 

"...Given the  oversold readings in the McClellan Oscillators, and the fact that the majority of our own indicators are near, or, at the bottom of their ranges, the odds favor a bounce. However, whether the bounce materializes  at the start of the week, or later in the week, deserves  special attention, and scrutiny. The preferred action would be an additional decline on Monday and perhaps Tuesday, in order to achieve fully oversold readings, and then a recovery. If the markets rally immediately at the opening on Monday,  the danger is, that the current oversold condition, will be alleviated by Tuesday-Wednesday, and then the markets will  turn back down again..."

The markets did rally right from the start on Monday, and that should put us on alert. The reason is, at today's rate of advance, it will take only one more day of higher prices/positive breadth/volume for the oversold conditions to be alleviated, while the indices simultaneously reach critical resistance. Will the indices have the power to overcome that resistance? We do not really know, and we don't care to guess, because "guessing" is not an acceptable practice, when one's money is at risk. The odds do favor more follow thru tomorrow, towards the first resistance levels, listed on the table below. From there, we'll have to let the market show if it has the right stuff to get thru resistance, and march to new recovery highs. Once again, we want to emphasize that the continuous weakness in the dollar, could very well place downward pressure on the equities, just like it did last week. 

(9-25-03) The indices rallied up to support, but were unable to sustain their gains, and push forward, they reversed and closed at the lows of the days. The rapid deterioration suggests that the decline can last another 1-2 trading days, before a bounce takes place. The real danger for the bulls at this point, is that portfolio managers with substantial paper gains -due to the market's advance this year- may decide take some chips off the table, in order to turn some of those paper gains, into real profits. In such case, we can have many trying to reach the exit at the same time, which will have undesirable consequences. At the moment, cash, or, fully hedged positions is the best place to be, in our view.

(9-24-03) Today, four factors in the equation, ceased to remain "equal!" The markets got, simultaneously,  four surprises they weren't counting on:

a) At a meeting in Vienna, OPEC said it will subtract 900,000 barrels from its target of 25.4 million barrels a day starting on Nov. 1, sending November crude oil futures  up almost $1 to $28.06.

 b) Viacom slashed 2003 revenue and earnings estimates, saying the local advertising market isn't improving as quickly as expected, just two months ago, Viacom had reaffirmed revenue guidance! Moreover, given that local advertisers tend to be small and medium size businesses (the ones that create jobs) their reluctance to advertise, may signify that they do not see any meaningful turn-around in the business climate, and they are opting to preserve cash.

 c) The Mortgage Bankers Association said its index of mortgage loan applications fell 3.7% last week, even as interest rates declined for a third week in a row, which doesn't bode very well for the housing industry.

 d) The dollar  lost additional  ground, unable to hold even one day's worth of anemic gains.

All the above developments conspired together to send prices lower in increasing volume, which suggests, that today's decline may not be the end of it. As you know, also in the weekly report we said that we were expecting "major bullish operations, to be suspended for this week." Given that the McClellan Oscillators penetrated the zero line - a development which usually  brings about  a bounce- and also the Quantifiers got down to the zero line-  a development, which also, usually  brings about a bounce- we can't rule out the likelihood of another bounce tomorrow, similar to Tuesday's. However, if the character of the market is indeed changing, the decline can continue straight on down for another 3-4 trading days, until the McClellan Oscillators get down to the -150/-180 area.  

(9-23-03) The markets bounced off of support and moved to close the gap left open from yesterday's decline. Yesterday's losses -induced by the dollar's decline- may have altered the course of action for the week. As you recall in the weekly report we said that we expected higher prices on Monday/Tuesday to be followed by lower prices into the end of the week, unless the dollar tanked, in which case the equation would change (see weekly report)  The dollar did tank, and thus the equation may have changed, actually reversing the expected course of action for the week. Yesterday's decline may result in higher prices and a test of channel resistance over the next few days, if the dollar doesn't lose any more ground. The fate of the dollar is in the hands of foreign traders, which means anything can happen overnight,  impacting  our markets accordingly, when they open the next morning. For now, given the combined action of the last two days, everything else being equal, we ought to expect a bit more upside over the next 1-2 trading days. The key condition is that the SP stays above 1015, any close below 1015, would signify that the markets are in for a much rougher time, than the bulls have anticipated.

(9-22-03)Today the dollar declined sharply, which caused a sharp sell-off in overseas markets, a sell-off in U.S. futures overnight, and consequently, a lower opening and a modest decline in U.S. markets. It should be noted that the decline in U.S. equities came on light volume, signifying -once again- investors' reluctance to sell, and reflecting their belief that the equity markets are on a solid path upward. Given a)  today's gap to the downside, and b) the fact that the indices ended the day at channel support,  it wouldn't be surprising at all to see a bounce tomorrow off of support  to close the gap.  However, at this point we must caution, that an exogenous event -such as a run on the dollar- may be in the offing. If that turns out to be the case, given the speed by which currency markets  markets move, investors' belief in equities will be seriously tested within the next  5-10 trading days. For now the trend is still up, the decline was on low volume, which means the bears have not wrestled control of the market away from the bulls, but with a little help from a rapidly declining dollar, all that can change. 

(9-17-03) The markets pulled back today, which as we said yesterday, was to be expected. At the moment the charts still look bullish, and although many key indicators are diverging negatively -most notably among all, the McClellan Oscillators and Summation Indexes- the bias is still on the upside. Going forward, pay attention to the support and resistance levels listed on the table below. We don't have much more to add for today, other than  that the dollar's sharp decline against the euro and the yen today, may create problems, if it is repeated tomorrow. 

(9-16-03) The indices marched higher, taking out  today's resistance levels ending the day just a couple of points below today's 1st upside targets, which now become tomorrow's resistance levels. Thus, we will make the same comment for tomorrow; any breach of tomorrow's resistance would suggest even higher prices, and a test of the first upside targets. Given that the indices ended the day at resistance, and given today's sharp advance, a one day pullback/consolidation would be normal. However, keep in mind what we said in the monthly report: "All in all, we remain modestly  positive -two of our market timing indicators are on a buy signal- but we are on alert for a possible significant change in trend late September, early October (10-15 trading days)"

 (9-15-03)The indices continued to consolidate in a narrow range for the third consecutive day. The lows/highs of the consolidation zone should serve as  guidance for the short-term direction of the market. Thus, we ought to expect continuation in the same direction, once support, or, resistance levels are taken out. one thing that we do what to emphasize, is that even if the markets declined further in the next few days, we do not believe that such a decline will accelerate significantly before the end of the month. 

(9-11-03)  Today we got the bounce from support levels. More importantly, the up-trends in all 4 major indices are still intact, which means  if you are a  chartist,  as long as the bullish pattern is intact, by definition, you got to be bullish, whether people like it, or not. The question is; will the bullish pattern continue to stay intact? On that front the answer is not clear yet, because most of our indicators -including the McClellan Oscillator- did not advance as robustly as the indices. That doesn't mean today's advance will be aborted tomorrow, sometimes it takes a day for all the internals to line up again, which may be the case why the indicators today did not quite confirm the advance. Having said that, we also need to keep in mind, that the non-confirmation today by several indicators, may indeed mean that today's advance was just a one day counter-trend move within a larger ongoing move, and thus the decline has more to go. The bottom line is, based on today's action we wouldn't take any positions because the picture is unclear, the charts are bullish, the indicators are not confirming yet. The proper thing to do, is wait for tomorrow's action to draw more reliable conclusions. If there is follow thru, then the charts won out, and we should expect another challenge of the most recent highs. If we have a reversal to the downside tomorrow, it means the decline isn't over yet, and it should extend into next week. Keep in mind that tomorrow we'll get the Retail Sales report for August, and it could be the catalyst for either a follow thru, or, another downside reversal.

(9-10-03) The indices fell hard lead by NASDAQ which hasn't had  a 50 point down day in several months. The sharp deterioration in the Thrust Oscillators and in the Quantifiers, confirm our earlier assessment that the decline/consolidation can last a few more days. However, the indices did end the day either at channel support, or, just a few points above it, which means that a bounce tomorrow from present levels is not out of the question. Now is the time for the bulls to show their bravado and conviction by buying at channel support. Ideally, we would like to see the decline lasting into Friday-Monday.

(9-9-03) The indices pulled back, but they're still holding above support, which means the trend is still up, and momentum is still on the side of the bulls. The technicals (TOs, MCOs) continue to suggest 1-4 days of additional consolidation and of lower prices, thus, we ought to expect the consolidation which is favored by the odds, but  given the strong momentum that has prevailed so far, at the same time we ought not to be surprised if we have yet another reversal tomorrow.

(9-8-03)All major indices are consolidating above support (see page one) which obviously is bullish. We have a flattening Thrust Oscillator, a diverging McClellan Oscillator, and overbought readings everywhere we look at, however, we also have extraordinary price momentum reminiscent of late 1999, early 2000. Consequently, although we can get a pullback lasting 2-5 days at any moment, it is equally possible that it can come either from current levels, or from the next upside targets. With the SP closing at 1031, and  NASDAQ at 1888 -just 2 points off 1890- we have to consider the possibility that the indices may attack the first upside targets by Wednesday. Momentum is on the side of the bulls, and at the moment, it supercedes everything else.

(9-4-03) The internals continued to exhibit lot's of strength, the price action itself was positive, indicative of a high end consolidation. This is one of those times that although the market is quite overbought, the momentum is such that another push to the upside tomorrow can not be ruled out. The odds do favor a pullback, but if they are going to fail, this is the point to do so. Still, we want to emphasize that we not think the first upside targets will be surpassed by far, even if we get an  upside continuation tomorrow. Pay attention to the 1022-1018 intra-day support zone in the SP, if that zone is breached to the downside, we'll see more selling, conversely, as long as it holds, we can expect higher prices.

 (9-3-03) Internals continue to look good, new highs at the NYSE bested new lows by 100 to 1.  Never-the-less, only the SP was able to surpass resistance, and only by one point. The highly overbought status of the markets, in addition with the divergences in the TOs, and BSEs, highly suggest that the indices will pull back, before they can mount a credible assault to the resistance levels shown in the table below.

(9-2-03) The markets continued to follow the same pattern they have exhibited since March. We got the push upwards while the Thrust Oscillators diverged. Unless we have a blow-off type of move in the making, we should now expect a pullback. This expectation is  also supported by the high level of the McClellan Oscillators. Therefore, we do not think the break-out should be used as reason to be adding to long positions.